Vijay Mallya, chairman and founder of grounded Kingfisher Airlines, is ready to inject about 4.25 billion rupees ($775,000 million) into the carrier to restart operations if and when the aviation regulator gives the go-ahead, one of the members of the airline’s lenders committee says.
“They have a plan for limited restart. They may start with certain number of flights, of say five aircraft, and go up within three to four months. They need 4.25 billion [rupees] for resuming the operations, which they will manage on their own,” says Shyamal Acharya, State Bank of India (SBI) deputy managing director for mid-corporates, Dec. 17 after a long meeting between the 17-member consortium of lenders and the cash-strapped airline.
Mallya has not sought any fresh funding from the lenders, Acharya says. “Though he did not convey how he will manage the funds, he assured us that he has the resources.”
An airline official says, “We will restart operations in a phased manner and will provide funding ourselves. We have not asked the bank for any support. . . We have also shared [the] full recapitalization plan [with the lenders], which will be further discussed with a small designated group of bankers,” the airline official adds.
Labor unrest over unpaid salaries followed by the suspension of its operating license forced a complete shutdown of Kingfisher’s daily operations since Oct. 1. The Directorate General Civil Aviation (DGCA) suspended the airline’s aircraft operator certificate and will not permit flights to resume until the operator has been declared airworthy by engineers.
Acharya says Mallya did not mention any talks with international airlines for a possible stake sale in Kingfisher.
The debt-ridden carrier is currently in talks with various investors, including Abu Dhabi-based Etihad Airways. Though the structure of a deal is not final, industry sources say the Gulf carrier is close to buying a 48% stake in Kingfisher for about 30 billion rupees ($553 million).
“No agreement has been reached either with Etihad or any other airline. The matters are merely at negotiation stages,” an airline official said last week. “But definitely we are looking at equity investments in the company to help the airline recapitalize, renew and ramp up its operations,” he added.
SBI has an exposure of 150 billion rupees to the Bengaluru-based airline, which has been a non-performing account since January. So is the case with other 16 lenders who together have given 550 billion rupees to the airline.